Just about every where you go these days in the USA people are talking about the high prices for gasoline. At least for now one can only hope that we have reached a plateau at $3.00 a gallon. Car manufacturers are producing vehicles that use hybrid fuel systems of ethanol blends, propane, bio-fuel, etc. How has the housing industry responded to the need for energy conservation since a home consumes significant amounts of energy in its operations as much if not more than cars?

It is the residential mortgage lending industry that is leading the way for home energy conservation by changing the way the “front end ratio” for mortgages will be calculated. The four main “front end ratio” factors looked at in the mortgage qualification process have historically been principle & interest, taxes, and insurance (PIPI) payments. As an example, if the borrower’s income is $100,000 a year they are considered to have $28,000 a year ($2,330 a month) available in the “front end ratio” to pay the monthly mortgage (PITI) principle and interest, taxes, and insurance. The mortgage lending industry recognizes the potentially negative affect high energy operating costs can have on a borrower’s successful repayment of their mortgage debt. The calculated home energy operating costs are a major factor they are prepared to figure into the “front end ratio”. In cases with older homes the cost of heating is equal to and sometimes more than the monthly mortgage payment. A buyer of such an older home may find it next to impossible to sell such a home and opt to walk away from it even with all the bad results. Thus making an energy efficient Ecobuilt™ home more valuable than a non-energy efficient home.

The housing industry has many alternative solutions not generally known to the consumers. The most valuable is to reduce the quantity of fuel required to condition the space with heat and air conditioning. This will also make the cost go down and make the transaction for mortgage qualification feasible or make the applicant qualify for the home. Seller’s assistance may provide a temporary solution but fuel prices increasing as they historically have will cause more hardship to the buyer. The buyer looking for a different home or ways of reducing the fuel consumption will make or break the deal. Home energy operating costs have reached significantly high levels that the mortgage lending industry must take action and change qualifying procedures to (PITIE) principle and interest, taxes, insurance, and energy or face massive numbers of foreclosures. What happens when we reach the European cost for fuel which is in the $5+ a gallon range?

Copyright © 2006, Dennis Maq & Siti M Crook, Energy Efficient Home Team™

Article Source: http://www.energyefficienthomearticles.com

The Energy Efficient Home Team™ is a success story in energy efficient home design and technology. Their proven success record dating back to the mid-1980s clearly positions them as the leading experts in energy efficiency in the home, mortgage loans, and tax incentive program in the 21st Century. Additional information about energy efficient homes and the Energy Efficient Home Team™ may be found at energy efficient home articles.

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